• Description

This paper reviews the distributional impacts associated with "environmental gentrification" following the cleanup and reuse of LULUs. By making a neighborhood more attractive, cleanup and reuse of LULUs may drive up local real estate prices. Renters in the neighborhood would have to pay higher rents. Moreover, existing residents may not value the removal of the disamenity as much as other households, creating a mismatch between their priorities and the new character of the neighborhood. Thus, even if they do not move, existing residents, especially renters, may be harmed by the gentrification effects of cleanup. We find that even a simple economic model does not yield clear predictions on neighborhood effects following cleanup, except for the initial effect of rising housing values. In the empirical literature, we actually find conflicting evidence of rising real estate prices following cleanup of LULUs. We find somewhat stronger evidence for increased housing density and increasing incomes, but no evidence for racial impacts. Our review also uncovers a variety of factors that are likely to minimize the likelihood of gentrification or temper its adverse consequences. Working Paper 07-29